People have different views on how to manage credit effectively. Check out these top ten managing your debt mistakes that must be avoided:
1. It’s okay to be late as long as you pay it back.
Timeliness of payment makes up about 35% of your total credit score so that means even a single late payment can affect your credit rating.
2. Closing your old credit cards.
Don’t close old credit cards just because you don’t use them as much anymore. Closing your old accounts would be like erasing the oldest parts of your credit history. Instead of cancelling your old accounts, use your credit card occasionally on small purchases and pay off your balance right away.
3. Not taking any credit at all.
Obtaining credit is okay as long as you can pay back your creditor on time. On the contrary, having no credit can also be a negative thing as you won’t be able to improve your credit history.
4. Submitting credit card applications to several credit card issuers at once.
Too many inquiries on your report can raise doubts to potential lenders. Submit only an application to the credit card that you seriously want to own.
5. Refusing to obtain a student credit card.
If you’re a student, take advantage of the opportunity to apply for a non-secured credit card even without credit history.
6. Not getting your credit report from the three major credit bureaus.
There are many websites that offer free credit reports. However, it’s best to order your credit report from a credible source such as Experian, Equifax and TransUnion.
7. Trying to fix or lie about the details of your credit.
Never use false information to improve your credit as this is a major offense.
8. Applying for a credit limit that is too high.
Having a high credit limit is fine but only if you can afford it. If you have trouble controlling your spending, a high credit limit can only worsen the problem.
9. Not notifying your bank about your billing statements that never reach you.
If your billing statements do not reach you on time, call your bank right away. You may have already been a victim of ID theft without your knowledge.
10. Paying only the minimum of your credit.
Carrying over a balance from one month to the next isn’t going to improve your credit score. What raises your credit score is the timeliness of your payments.
